Search form

You are here

Markets Achieve What the Left Wants Too

First, I happily accept Roderick’s certification as a “non-vulgar libertarian.” I’m hoping he’ll get me the keys to the secret restroom, which I’m sure is cleaner than those in regular libertarian organizations (and certainly cleaner than those in the statist status quo) because these are cleaned by the owner-worker-managers themselves, rather than through hierarchical job assignments.

More seriously, he raises the question of whether my “playing defense” perspective runs the risk of minimizing the problems that really exist in a statist society. Specifically, he wonders whether pointing to the real gains of the poor leaves me and others open to other ways in which the poor have become worse off in recent years, thanks to various state policies. He also suggests that as far as left-libertarian dialogue goes, it might be more constructive to find places of agreement on the ways in which inequalities pervade the current system.

Again, I think Roderick and I have a disagreement of degrees, not principle. I also think it’s centrally important that libertarians point to the variety of injustices and inequalities that pervade the current system. For example, in my own work on gender and the family, I have pointed to the ways in which the current income tax system in the United States, through its combination of progressivity and not allowing married couples to treat each one’s income separately, is extremely biased against the labor force participation of secondary earners. Their first dollar gets taxed at the highest rate paid by the primary earner. Given that women are more likely to be the secondary earners (for cultural reasons that a thicker libertarianism could join with the left in trying to change), this ends up punishing married women who wish to work. That punishment is even greater when one considers the other costs associated with working (e.g., finding affordable day care in a highly regulated market). Simple changes to the tax system, or even going to a low and flat tax, would rectify this situation and help to put the genders on more equal ground in the labor market. Here’s a case where libertarians could join with the feminist left in working to change the tax system in a way that reduces a state-created gender inequity.

Even as we agree with the left about the existence of real inequalities in the status quo, sometimes one of the most effective things libertarians can do is to identify how market processes might better serve the left’s stated ends than their own preferred policies do. For me, this is one of the advantages of the data showing the better consumption possibilities for the poor. Most of that growth, I would argue, has come from the underlying market processes that have reduced the prices of new innovations and made luxuries into basics, all while the same processes have generally raised the value of human labor so that all of these goods can be afforded. Markets, including Wal-Mart, have done more for poor Americans than any government program, at least in the long run if not the short run. As I’ve said elsewhere, given Wal-Mart’s success in improving the living standards of poorer Americans, through both jobs and cheaper goods, if it were a government program, it would be the greatest anti-poverty program ever (and it would be cheered by the left for the same reasons it should be today, even as one recognizes its imperfections).

By the same token, libertarians can also point to government interventions such as minimum wage laws and occupational licensure laws that limit the labor market opportunities of the poor, particularly those of color, and engage the left in conversation about whether such policies really do serve their ends better than the results of free(d) markets.

Finally, let me note, and I know Roderick agrees with me here, that libertarians have paid far too little attention to the ways in which state intervention is a source of racial and gender inequities. That’s not to say we have paid no attention to them, but it is to say that if we are going to engage the conversations over policy that are taking place on the left (and among many academics), we are going to have to pay more attention to them.

More importantly, if libertarian ideas are ever going to be significantly attractive to more women and people of color, and perhaps more young people regardless of race and gender, we are going to have to do a lot better in showing how our ideas can speak to their concerns and their rightful claims of historical injustice. Aside from the fact that white men are becoming even more of a minority themselves so appealing to women and people of color is no long optional, much earlier in its history, libertarianism stood in solidarity with the concerns of these groups, who they rightly saw as victims of state oppression and for whom freed markets and freedom in general would go a long way in helping.

Nothing makes me prouder to be a free-market economist than knowing that the epithet “the dismal science” was coined by people like Ruskin and Carlyle who complained that a world of laissez-faire as defended by economists such as J. S. Mill and others would undermine the racial hierarchies of Victorian England. The “dismalness” of economics was that it saw a future of racial equality and leveled hierarchies thanks to the results of the free market. I wish more of my libertarian colleagues would recognize our past identity being at the forefront of concerns about issues of race and gender and engage with our friends on the left about the best means to achieve so many ends that we share. Much as we should reject corporatism in favor of truly freed markets, libertarians should push ourselves away from the right’s reflexive rejection of the discussion of race and gender as “political correctness” and realize that for most of our history our opposition to corporate-state power and our sympathy for the victims of state-caused inequalities of race and gender made us the “politically correct” ones.

Also from This Issue

In this month’s lead essay, philosopher and libertarian theorist Roderick T. Long draws a sharp contrast between corporatism and libertarianism properly understood. He argues that liberals, conservatives, and even libertarians have all been guilty to some degree of obscuring this difference, and that the quality of our political discourse has suffered accordingly. He suggests that libertarians should guard themselves against falling into the trap of “vulgar libertarianism,” in which all things good spring from business, and particularly from business as usual. Corporations, he argues, should be no more free from scrutiny than any other institution in society, and often businesses have done more than their share to hamper free economic relations in the industrialized world.

One implication of all of this is that the truly free market is farther away than we imagine. Long suggests several ways in which a freed market would be different from what we see around us today. Notably, nearly all of these differences are to the benefit of the consumer and the small or start-up business. These likely outcomes of laissez faire suggest new grounds for left-liberals and libertarians to revise their thinking on economic issues and on politics more generally.

In his response to Long, Matthew Yglesias argues that although corporations naturally seek to win special privileges from the state, libertarianism is far from the obvious solution to the problem. Instead, he reiterates the charge that libertarians often act as corporate apologists and suggests that the net effect of any “free market” advocacy will tend strongly toward corporate power. Liberals may have much to learn from libertarians on certain issues and in some policy areas, but the laissez-faire solution to corporate political influence is unworkable.

Steven Horwitz offers several examples of so-called “de-regulation” that only served to benefit corporations, while leaving the government, and therefore the taxpayers, to shoulder the risks of the market. He argues that market competition is a form of regulation, albeit a kind worth wanting, as it forces corporations to respond to consumer demand and punishes them when they fail to meet it. He takes issue with Long’s lead essay by arguing that “playing defense,” that is, defending today’s corporations when they act consonantly with a fully freed market, is a valuable part of libertarian advocacy. One must nonetheless take issue with these same corporations when they violate the principles of laissez faire and distinguish carefully between these cases.

In his response essay, Dean Baker declines to tally up a “score” of how well libertarians, or other groups, have defended a truly impartial, laissez faire economy. Instead, he suggests intellectual property as an obvious area where libertarians must challenge corporate power to distort the market. Patents that make health care more expensive and copyrights that artificially restrict whole areas of our culture are obviously concessions to corporatism, and the “extraordinary abuses” undertaken to enforce these privileges should be vigorously challenged. Although libertarianism has been skeptical of both patents and copyrights, Baker suggests that this is an area deserving still further attention, and one in which liberals could perhaps become solid allies.

The discussion this month has focused to a greater than usual degree on the activities of certain Cato Institute policy scholars. The editors thought it appropriate to solicit responses, and we present them here in their entirety.

Disclaimer

Cato Unbound is a forum for the discussion of diverse and often controversial ideas and opinions. The views expressed on the website belong to their authors alone and do not necessarily reflect the views of the staff or supporters of the Cato Institute.